The Currency analytics
By Julie Binoche
Precious metals crashed hard Monday. Gold and silver prices tumbled to their lowest levels since January as traders dumped positions amid growing speculation that Kevin Warsh…
Gold dropped to $1,850 per ounce while silver fell to $22 per ounce, ending what had been a pretty solid bull run for both metals.
Markets hate uncertainty. And right now, that's all they've got.
No official word has come from the White House yet about Warsh's nomination, but the mere possibility has sent shockwaves through trading floors.
But here's the thing - some analysts think this whole selloff might be overdone.
John Smith from Global Markets Research said Monday that commodities always get hit first when rate expectations shift.
Physical demand tells a different story though. The London Bullion Market Association reported that central banks in emerging markets kept buying gold despite the price drop.
Wall Street analysts are glued to their screens waiting for any Fed official to say something, anything, that might calm nerves.
The Treasury Department hasn't weighed in either, leaving markets to guess how fiscal policy might align with Warsh's potential monetary approach.
Economic data coming this week won't help calm things down. The jobs report and inflation figures are due soon, and those numbers will probably influence whatever the Fed decides…
Despite Monday's carnage, gold and silver have historically held value during uncertain times.
The nomination process itself could take weeks to unfold, meaning this uncertainty isn't going away anytime soon.
Warsh's potential appointment represents a clear shift toward more conservative monetary policy.
Trading volumes stayed elevated through Monday's close as institutional investors continued adjusting positions.
Warsh previously served on the Federal Reserve Board from 2006 to 2011, where he consistently advocated for higher interest rates even during the financial crisis.